Retirement Plans Newsletter

May 26, 2017 logo logo
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Benefits Paralegal
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in VA

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TDM Retirement Services
in MI

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Webcasts and Conferences

When To Wait, Hold, Or Sell: A Wealth Manager Reveals His Wisdom On Stock Option Exercise Strategy

DOL Investigations of Employee Benefit Plans: Navigating Enforcement Actions, Audits and Settlements
June 6, 2017 WEBCAST

Eureka! A Next Generation Retirement Plan Design
June 20, 2017 WEBCAST
Findley Davies, Inc.

Best Practices for an Effective Retirement Plan Committee
June 21, 2017 WEBCAST
University Conference Services

Tips From a Retirement Plan Auditorís Perspective
June 21, 2017 in TX
ASPPA Benefits Council [ABC] of Dallas/Fort Worth

HIPAA / HITECH Update for Health Plan Sponsors and their Business Associates
July 11, 2017 in MI
Miller Johnson

HIPAA / HITECH Update for Health Plan Sponsors and their Business Associates
July 13, 2017 in MI
Miller Johnson

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[Guidance Overview]

June 9 Is the Fiduciary Rule Launch Date After All (PDF)
"In this latest set of FAQs, DOL describes three different communications to participants about increased contributions, apparently from paid service providers.... The distinctions DOL may be hinting at in these FAQs, however, are not productive. The Final Rule is explicit in generally including recommendations about distributions as fiduciary advice, but says nothing about contributions ... As a matter of both statutory interpretation and retirement policy, contributions present a very different case from that of distributions. Given the benefits to both participants and the retirement system of increased contributions, retirement service providers should not be exposed to fiduciary claims if and when they recommend that participants increase contributions, even if it also serves the provider's economic interest for them to do so."
Eversheds Sutherland


Online Learning Course: 401(k) Plan Administration

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Learn more about plan design issues, plan investments, fiduciary responsibility and plan fees, employee communications and investment education, automatic enrollment, participant loans, distributions, and plan amendment and termination.

[Guidance Overview]

Interesting Angles on the DOL's Fiduciary Rule, Part 48
"For the most part, the FAQs were helpful. For example, they clarify that certain types of information and conversation are educational, rather than fiduciary.... While the general rule for conflicted advice is that the Financial Institution and adviser must adhere to the Impartial Conduct Standards, [Q&A #6] said that Financial Institutions have additional responsibilities to manage conflicts so that variable compensation does not influence advisers to make recommendations that are not in the best interest of Retirement Investors."

The Train Keeps a Rollin' -- DOL Conflict Rule Transition Guidance Issued
"DOL will emphasize compliance assistance --- not enforcement during an extended transition period.... Changes to the rule will impose fewer burdens on fiduciaries.... DOL commented favorably on industry innovations in mitigating conflicts of interest and it indicated that this innovation could form the basis of a new streamlined exemption. For example, DOL specifically mentioned as an example the use 'clean shares' and other unidentified approaches as well as a basis for less burdensome exemption conditions."
Charles Humphrey, for ERISAPedia

DOL Fiduciary Rule's Upcoming September Surprise Will Have Brokers Documenting Discussions with Clients
"[Attorney Fred Reish] was unrelenting in his contention that the changes are fundamental.... 'In a post-fiduciary-rule world', he said, 'the burden of proof is on the advisor to prove what he or she did was prudent.' Also on Reish's post-rule checklist: Make sure all actions performed on behalf of the client are listed and noted ... formalize the list of services provided ... monitor and meet annually, tax planning, holistic planning, aggregate asset allocation, help with minimum distributions, investing for withdrawals and sustainable withdrawals."

Fiduciary Rule Pushes Indexed Annuity Carriers to Develop New Products
"Half a dozen companies ... have debuted fixed-rate deferred annuities available with income riders since the start of the year. That's new to the industry -- insurers have traditionally only offered these income riders, which provide a lifetime income stream, for variable and indexed annuities. But, come January, when the rule fully comes into force, it's going to become more difficult to sell variable and indexed products, especially for independent insurance agents. That has led insurers to develop a workaround for distributors to continue selling income guarantees."


Frozen plans are different, and need to be managed differently.

Sponsored by Russell Investments

Thousands of pensions have frozen benefit accruals on the path to plan termination. Many more are considering such a step. The Frozen Plan Handbook is an illustrative guide for sponsors who have frozen -- or are considering freezing -- their pension plan.

ESOP Trends in the Marketplace (PDF)
17 presentation slides. "[1] Sophisticated pre-transaction structure analysis. [2] Investigation of an ESOP transaction in connection with other events. [3] Allowing a 'market' process to include an ESOP transaction alternative. [4] Exploration of tax planning opportunities. [5] Development of sophisticated economic transactions. [6] Post transaction planning. [7] ESOP-owned S corporations beginning acquisition strategy (typically 'mature' ESOP situation). [8] ESOP-owned companies increasing attractiveness to strategic buyers (end of ESOP lifecycle)."
McDermott Will & Emery

Measuring a 'Year of Participation' for ESOP Diversification
"Diversification is required to be offered to ESOP participants who have attained age 55 and have ten years of participation in the plan.... Does 'year' mean an entire plan year or any fraction of a plan year? 'Participation' begins at the entry date, but when does participation end? Date of termination, last plan year in which the participant received a contribution, distribution of vested account balance, or something else? Variations in the definition of participation can change when a participant is eligible to diversify."
Principal Financial Group

Contributions to Public Pensions Experience Significant Gains
"The 2016 Annual Survey of Public Pensions found that total contributions were $191.6 billion in 2016, increasing 6.6 percent from $179.7 billion in 2015. Government contributions accounted for the bulk of them, $140.6 billion in 2016, increasing 6.5 percent from $132.0 billion in 2015, with employee contributions at $51.0 billion in 2016, climbing 7.1 percent from $47.7 billion in 2015[.]"
U.S. Census Bureau

World's Major Economies to Come up $400 Trillion Short on Retirement Savings
"Longer life spans and disappointing investment returns will help create a $400 trillion retirement-savings shortfall in about three decades, a figure more than five times the size of the global economy ... That includes a $224 trillion gap among six large pension-savings systems: the U.S., U.K., Japan, Netherlands, Canada and Australia ... China and India account for the rest."


EPCRS: Correct Plan Errors and Minimize Penalties

Sponsored by Lorman and BenefitsLink

May 31 webinar will discuss common retirement plan errors and pre-approved methods of correction, as well as tips and practices that can help avoid future problems. Presented by Blake C. MacKay, of Alston & Bird LLP. BenefitsLink discount


The Data Is In: The Fiduciary Rule Will Harm Small Retirement Savers (PDF)
20 pages. "92% of firms surveyed say that the Rule could limit or restrict investment products for their customers, which could ultimately effect some 11 million households. Up to 7 million [IRA] owners could lose access to investment advice altogether.... A survey of advisors finds 71% will stop providing advice to at least some of their current small accounts due to the risk and increased costs of the rule. Other surveys found that 35% of advisors will stop serving accounts under $25,000, and 25% will raise their client minimum account thresholds."
U.S. Chamber of Commerce


How to Steal a Lot of Money from CalPERS, the Nation's Largest Public Pension
"Presumably the mega-pension knows ... all the fees -- asset-based and performance -- it pays its money managers pursuant to fee invoices.... What CalPERS doesn't know is the performance and other fees its managers take directly from the funds they manage for CalPERS without asking, disclosing or invoicing.... [A] software program developed by outside firms determined at the end of 2015 that the pension paid $3.4 billion in performance fees over the past quarter-century to private-equity firms. In 2016, that number was said to be $490 million. Don't believe these figures for a second."
Edward Siedle, in Forbes

Executive Compensation
and Nonqualified Plans

Providing Voluntary Separation Agreements to Some Employees Did Not Create an Informal ERISA Severance Plan
"A sales manager sued her former employer following her involuntary termination of employment, asserting that she was entitled to severance benefits because the employer's practice of providing voluntary separation agreements (VSAs) to some departing employees created an informal ERISA plan. But the court ruled in favor of the employer, concluding that, although there was a document outlining the employer's process for executing VSAs, without additional evidence indicating that the employer intended to create an ongoing benefit arrangement the employer's practice and the process document were not enough to create an ERISA plan." [Mance v. Quest Diagnostics Inc., No 12-7361 (D.N.J. Feb. 21, 2017)]
Thomson Reuters / EBIA

Discussions on
the BenefitsLink Message Boards

Reporting for a Terminated Plan; All Assets Distributed, Then Check Returned
"Plan terminated and all assets distributed in December 2016. I have not filed a 2016 5500SF yet, because in March 2017 a distribution check was returned and deposited into the plan's investment account. How do I handle the 2016 return? Do I file a final filing for 2016 and then amend the 2016 return without marking 'Final' or do I file the 2016 return originally with zero assets, but not marked 'Final'?"
BenefitsLink Message Boards

Participants Reappear After DB Plan Terminated and Trust Emptied
"A client had a defined plan that provided that if a participant could not be located, the benefit would be forfeited, and then reinstated if the participant reappeared. The plan was terminated, and made no provision for the participants it couldn't locate. Now some previously missing participants have appeared. The client is perfectly willing to pay them from its own assets. However, clearly the money can't go into the trust, since the trust no longer exists. And we're trying to figure out whether there is any way to set things up that the money can be rolled over. In case it matters, it's a governmental plan, so we're not concerned about ERISA rules."
BenefitsLink Message Boards

Press Releases

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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2017, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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